More than 7 million U.S. households are unbanked, meaning no one living in that household has a checking or savings account, according to a FDIC investigation. Lack of a bank account can make it difficult to get a home loan, a small business, or a small dollar, leaving millions of Americans without access to finance.

To help address this issue, the National Asian American Coalition (NAAC), a California-based CDFI, launched NAAC Financesa digital lending service for low to moderate income communities who find it difficult to access traditional banking services. The service is a partnership with startup Asenso Finance from global venture capital studio Talino Venture Labs.

“It’s digital lending and financial management,” says Mel Dimacali, deputy director of CDFI at NAAC. “Rather than just asking people to borrow, it also helps them improve their credit.”

The digital lending service was created out of an FDIC technology sprint competition exploring how to help banks meet the needs of the unbanked through new technologies and methods. NAAC and Talino Venture Labs won the market readiness category with the program, “Breaking Down Barriers: Reaching the Last Mile of the Unbanked.”

“The goal was to deliver a product that will not only be attractive to people to join in terms of the benefits of the loan portion and improving their credit, but also education in financial management,” says Dimacali.

Increasing home ownership is the ultimate goal of NAAC and its programs. The organization is a HUD-approved nonprofit housing counseling agency that provides down payment assistance and homeownership counseling, as well as small business loans.

NAAC is currently accepting applications for the new NAAC Funding Program and plans to fully launch in February 2022 with the SPRING Small Dollar Loan. Borrowers can apply for loans of $1,000, $2,000 and $2,500, with interest rates ranging from 10% to 20%, and loan applications will be approved quickly, within two business days. Funds will be disbursed within two weeks.

The quick turnaround is an effort to address the “short-term liquidity” issue that individuals and small businesses often face, Dimacali says. The program also aims to help people avoid payday lenders when they need money fast, because these loans can charge up to 400% interest and leave borrowers in a more difficult financial situation.

NAAC Finance also requires borrowers to complete financial literacy training where they will learn money management skills. “We’re going to teach you why money is important, why credit is important,” Dimacali adds. “We give them examples of why building your credit is important because by building your credit you can be a more successful small business owner and a more successful individual, in terms of credit and financial empowerment. .”

Low to moderate income individuals with a credit score below 680 who are employed are eligible for a NAAC Finance loan. Small business loans are also available to help small businesses access capital to grow or recover from the difficulties of the COVID-19 pandemic.

Dimacali says the program isn’t just available to the Asian-American community, and NAAC partners with other community organizations to reach underserved groups. “Once this is fully launched, it will only grow more and more in terms of truly serving communities with education,” he says.

Dimacali says he’s very pleased that NAAC Finance is helping unbanked, low-to-moderate income people become more financially independent, take an active community role, and achieve the “American dream of owning your own home.”

“Because really, when someone has a low credit score, statistics show it tends to stay that way,” he explains. “They tend to be trapped in a system. We offer them a springboard through our loans to get back on track. And it’s exciting because we have a lot of partners who are involved in this mission.

This story is part of our series, CDFI Futures, which explores the community development finance industry through the lens of equity, public policy and inclusive community development. The series is generously supported by Partners for the Common Good. Sign up for PCG’s CapNexus newsletter at capnexus.org.